1. Arshadi Corp.'s sales last year were $70,000, and its total assets were $22,000. What was its total assets turnover ratio (TATO)?

Select the correct answer.

a. 3.18

b. 1.98

c. 2.78

d. 2.38

e. 1.58

2. Hutchinson Corporation has zero debt - it is financed only with common equity. Its total assets are $325,000. The new CFO wants to employ enough debt to bring the debt/assets ratio to 40%, using the proceeds from the borrowing to buy back common stock at its book value. How much must the firm borrow to achieve the target debt ratio?

Select the correct answer.

a. $129,973.00

b. $130,000.00

c. $129,986.50

d. $129,959.50

e. $130,013.50

3. Orono Corp.'s sales last year were $500,000, its operating costs were $362,500, and its interest charges were $12,500. What was the firm's times interest earned (TIE) ratio?

Select the correct answer.

a. 7.00

b. 9.00

c. 10.00

d. 11.00

e. 8.00

4. Bostian, Inc. has total assets of $790,000. Its total debt outstanding is $185,000. The Board of Directors has directed the CFO to move towards a debt-to-assets ratio of 55%. How much debt must the company add or subtract to achieve the target debt ratio?

Select the correct answer.

a. $249,394

b. $249,447

c. $249,553

d. $249,500

e. $249,606

5. Ziebart Corp.'s EBITDA last year was $290,000 ( = EBIT + depreciation + amortization), its interest charges were $9,500, it had to repay $26,000 of long-term debt, and it had to make a payment of $17,400 under a long-term lease. The firm had no amortization charges. What was the EBITDA coverage ratio?

Select the correct answer.

a. 4.01

b. 4.46

c. 4.91

d. 5.81

e. 5.36